Government says settlement with 1,905 Manus detainees, who sued over 'hostile conditions', is 'not admission of guilt'.

The Australian government has agreed to pay A$70m ($53m) to more than 1,900 asylum seekers who sued over their treatment at the Manus Island detention centre on Papua New Guinea (PNG).

Some 1,905 men who were detained at the facility between November 2012 and December 2014 filed legal claims last year against the Australian government and two contractors who ran the camp over alleged physical and psychological injury they said they suffered as well as for false imprisonment.

The camp is one of two Australian facilities for processing asylum seekers that have attracted widespread criticism from the United Nations and rights groups because of their harsh conditions and allegations of systemic abuse.

Wednesday's settlement came just before the Victoria state Supreme Court was set to hear this case.

Lawyers for Slater and Gordon, the law firm representing the case, said they believed it was the largest human rights class action settlement in Australian history.

"The people detained on Manus Island have endured extremely hostile conditions but they will no longer suffer in silence," attorney Andrew Baker said.

"While no amount of money could fully recognise the terrible conditions the detainees endured, we hope today's settlement can begin to provide them with an opportunity to help put this dark chapter of their lives behind them."

The lawyers said the compensation would be distributed among the former and current detainees according to the length of their detention and the severity of the injuries and illnesses they alleged they had suffered.

Australian government denied the alleged claims and said the settlement was not an admission of liability.

"An anticipated six-month legal battle for this case would have cost tens of millions of dollars in legal fees alone, with an unknown outcome. In such circumstances, a settlement was considered a prudent outcome for Australian taxpayers," Immigration Minister Peter Dutton said in a statement.

'Manus was hell'

Lead plaintiff in the asylum seekers' case, Iranian Majid Kamasaee, welcomed the settlement as overdue acknowledgement of the suffering he and others endured.

"This case is not just about me, it is about every person who has been trapped on Manus Island," Kamasaee, who was held for 11 months, said in a statement read out by the lawyers.

"I left my home in Iran in 2013 because of religious persecution and I came to Australia seeking peace. But I was sent to Manus, which was hell. The way we were treated at the Manus Island detention centre was degrading and cruel."

The Manus Island detention centre, which was opened in 2012, was deemed illegal by PNG's Supreme Court last year. It is expected to fully close in October.

Under Australian law, anyone intercepted trying to reach the country by boat is sent for processing to detention centres on Manus Island or the Pacific island of Nauru.

Australia maintains they will never eligible to be resettled in Australia.

The policy has been highly criticised domestically as well as internationally.

In a recent report, the UN's special rapporteur on human rights of migrants said Australia has "clear and undeniable" responsibility for the "physical and psychological damage" suffered from refugees and asylum seekers.

'Significant, but not a solution'

Kon Karapanagiotidis, the founder and chief executive of the Asylum Seeker Resource Centre, added the "landmark case" was significant as it sets a precedent, but it is not a solution.

"Whilst the compensation is important, it does not give [these men] what they wanted in the first place," Karapanagiotidis SAID.

"No compensation is going to give these men what they want, which is freedom from harm."

He also said that he believes there is an "immediate and humane" solution and that is to "allow these men to come to Australia".

The United States is considering resettling up to 1,250 refugees from Manus Island and Nauru under a deal struck between Australia and the Obama administration.

Those considered for resettlement, however, will subjected to the "extreme vetting" policies of the US.